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Technology / AI and automation

Clothing: premium sector overtakes value as fastest growing segment of the market

Premium sector takes majority of 2007 growth

Those retailers pitched at the premium end of the clothing market – going from the top end of the high street (e.g Hobbs, Reiss) to the luxury brands (e.g Burberry) – have grown nearly four times faster in 2007 than the overall clothing market. Their combined market share this year will be 18.5%, an increase of 1.6 percentage points. Though it is the smallest segment of the UK market (the value sector accounts for 24.6% and the mid-market 56.9%), the premium sector is recording the highest growth in the market. According to Verdict Research, shoppers will spend an extra GBP785 million through premium retailers in 2007, surpassing the extra GBP697 million being spent through value retailers. Meanwhile, the middle market is losing share.

The realignment on price since the millennium, fuelled by the value retailers, has given shoppers the option of buying garments at rock bottom prices and investing their savings at the top end of the market, says Maureen Hinton, lead analyst at Verdict. And now that price and value are no longer an issue, we believe consumers are looking for exclusivity, and brands with a strong identity that set them apart from competitors.

Mid-market adapts as it loses share

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Though the mid-market overall has lost share (-2.8 points), individual retailers in this category are benefiting from the trends in the market by segmenting their ranges more clearly. These retailers are providing value ranges at entry level and stretching their price architecture upwards into more premium products at exit level. Indeed, with the demand for more premium product growing, albeit still at good value prices, more and more retailers are investing in developing these premium ranges. In the case of H&M for instance this was done by creating a completely separate brand, COS and its success highlights how strong the demand is for higher quality clothing with a distinctive style.

Verdict expects this trend to continue, despite a downturn in the economy in 2008

Hinton concludes: When consumers have less to spend they are more selective in what they do buy – relying on them to become solely price driven is too simplistic a response to changing economics. Retailers at every level of the market will have to provide shoppers with a very good reason for taking a share of their clothing expenditure in 2008.

Source: Verdict Research

 
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CBR Staff Writer

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